The two and a half year study* by Kathy Pain and Gilles Van Hamme withacademics in the UK, Belgium, France, Italy, Bulgaria and Sweden, identifies for the first time just how functionally interconnected and integrated the European economic space really is.

Despite improvements in information and communication technologies, declining transportation costs and increasingly transparent global markets, the results show that distance still matters and is a barrier to international trade.

While the UK is shown to be the least ‘European’ member state in terms of its regional relations, British and other European cities are interlocked by inter-urban business networks which add value to UK trade, and to trade across Europe as a whole. During the 2007/08 global financial crisis when international commercial office investments slumped worldwide, inward investment flows actually concentrated on London and other European cities in contrast to the picture for New York and the US.

In increasingly competitive global markets, international firms using European cities as their bases to do business, powerfully interlink them. Maintaining UK-Europe intense intercity flows of information, finance, real estate investment and people will be critically important to boost growth and upgrade the economic position of cities across Britain. As one of the world’s most urbanised global macro-regions, the European system of cities collectively connects it to major cities in distant globalization regions – the US and the rapidly emerging economies in Eastern Asia and China.

In a volatile world economy, strengthening the capacity of Europe and its cities to respond to very rapid global changes in a coordinated way will become ever more essential.

Kathy Pain is a professor of real estate development and a research director in the University of Reading’s Henley Business School. She holds a PhD in geography and is a Corporate Member of the Royal Town Planning Institute and a Fellow of the Royal Geographical Society. She has published extensively on the sustainable economic and spatial development of global mega-city regions. Her research has informed academic and policy thinking in the UK, Europe, North America, the Middle East and Pacific Asia.